Company Overview

TechnologyOne is Australia’s largest enterprise software company, developing cloud-based ERP software that helps governments, universities, councils and large organisations manage finance, HR and operations.

Founded in Brisbane in 1987, the company has transitioned to a Software-as-a-Service (SaaS) model and now serves more than 1,200 organisations across Australia, New Zealand and the UK with integrated enterprise software platforms.

Core Assets & Production Base

TechnologyOne’s core asset is its cloud-based enterprise ERP platform, primarily built around the CiA (Ci Anywhere) platform and DxP digital experience layer, delivered as Software-as-a-Service to governments, universities and large organisations.

Core Products, Customers & Competitive Position

TechnologyOne provides a fully integrated cloud ERP platform (CiA / Ci Anywhere) covering finance, HR, payroll, asset management, procurement and student administration for large institutions.

Its primary customers are local governments, universities and public sector organisations in Australia, New Zealand and the UK, where the company holds a strong niche position competing with global ERP vendors but benefiting from deep sector specialisation.

Company Life Cycle

After decades as a traditional software vendor, the company has completed a major transition to recurring SaaS revenue, moving it into a mature but still expanding phase of long-term subscription-driven growth.

Profit Drivers

Profit growth is primarily driven by expanding the customer base, migrating legacy clients to SaaS, and increasing recurring revenue per customer, which improves margins due to the scalable nature of cloud software.

Financials

Cost Structure

TechnologyOne’s main costs are software development, cloud infrastructure, and employee expenses, particularly engineers, consultants and support teams required to maintain and expand its ERP platform.

While development costs remain significant, the SaaS model improves operating leverage over time, as additional customers can be served with relatively low incremental costs once the platform is built.

Income Statement Trends

In FY2025, TechnologyOne reported revenue of about A$598–610 million and operating profit (EBIT) of roughly A$175 million, reflecting strong margins typical of mature SaaS businesses.

Over the past few years, revenue has grown steadily from A$429 million in 2023 to nearly A$600 million in 2025, implying roughly 15–18% average annual growth, driven mainly by SaaS subscriptions and rising recurring revenue.

Balance Sheet Trends

TechnologyOne maintains a very strong balance sheet with minimal debt and solid cash reserves, reflecting the high cash generation typical of mature SaaS businesses.

Over recent years, equity and cash balances have steadily increased, while liabilities remain manageable thanks to growing recurring SaaS revenue and strong operating cash flow.

As of FY2025, the company held roughly A$300 million in cash and short-term investments, alongside about A$350–370 million in intangible assets, with shareholders’ equity around A$440 million, illustrating the asset-light structure typical of successful software firms.

Cash Flow Trends

TechnologyOne has generated strong and steadily rising operating cash flow, supported by its high-margin SaaS subscription model and expanding recurring revenue.

In FY2025 the company recorded about A$290 million in operating cash flow and roughly A$150 million in investing outflows (largely capitalised software development – intangible capex), implying free cash flow of around A$140 million, while also executing its first share buyback of about A$30 million.

Capital Expenditure vs. Depreciation – FY2025

In FY2025, TechnologyOne recorded about A$80 million in depreciation and amortisation, while investing around A$150 million in capital outlays. This shows the company is not just maintaining current capacity but actively investing for future growth and expansion.

Important Recent Announcements

The company announced a significant expansion of its UK public sector client base, with annual contract value growing by around 20%.

They also flagged further enhancements to the Ci Anywhere platform, aiming to improve user experience and expand functionality for existing clients.

Fundamental view

Dividend & Fundamentals

TechnologyOne pays a steadily growing dividend supported by strong recurring SaaS cash flows, with the latest annual yield around 1.33% and 65% franking, reflecting its consistent profitability in Australia.

Fundamentally the company trades on a high-growth valuation with a P/E near 65x, backed by about A$598.5M revenue and A$137.6M net profit, while free cash flow generation keeps the price-to-FCF around 41x.

Financial Forecasts

Analyst consensus suggests revenue rising from about A$593M in FY2025 to roughly A$686–691M in FY2026, with EBIT expected to grow from around A$176M to about A$210M and EBITDA approaching A$303M as SaaS scale continues to improve margins.

Earnings are forecast to increase from about A$0.42 EPS in FY2025 to roughly A$0.50 in FY2026, while dividends per share are expected to rise to around A$0.35, reflecting continued profit growth and strong cash generation.

Valuation

Based on consensus FY2026 EPS of about A$0.50, applying a reasonable long-term multiple of roughly 40x for a high-quality SaaS compounder implies an intrinsic value near A$20 per share.

While the company deserves a premium for its recurring revenue model and strong growth profile, the current market valuation already prices in significant future expansion, leaving limited margin of safety.

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Technical View

The long-term trend remains structurally bullish, with the share price still trading above the rising 200-week moving average near A$23–24, which has historically acted as a strong support zone.

However, the stock is currently in a medium-term correction, with resistance around A$30–31 (50-week MA) and near-term support around A$23–24.

TechnologyOne (ASX: TNE) share price forecast — *Source: TradingView*

Key Risks, Potentials & Catalysts

Key risks include valuation compression if SaaS growth slows, increasing competition from global ERP vendors, and potential delays in public-sector technology spending in Australia, the UK or New Zealand.

Key catalysts include continued SaaS migration of legacy clients, expansion in the UK public-sector market, and sustained double-digit revenue growth, which could support further earnings upgrades and long-term share price appreciation.

FAQs About TechnologyOne (ASX: TNE)

1- Is TechnologyOne’s high valuation justified?

The stock trades on a premium multiple because of its strong recurring SaaS revenue, high margins and consistent double-digit growth, although future returns depend heavily on maintaining this growth trajectory.

2- Is the dividend sustainable?

Yes. Dividends are supported by strong operating cash flow and rising earnings, while the company continues investing heavily in product development and platform expansion.

3- What is the main long-term growth driver?

The key driver is the ongoing migration of customers to the company’s cloud SaaS platform, along with expansion in markets such as the UK public sector and deeper adoption of its ERP modules.